Affin positive on Alam Maritim’s contract win

Affin positive on Alam Maritim’s contract win
Business & Markets 2013
Written by Jeffrey Tan of theedgemalaysia.com
Friday, 20 September 2013 12:03

KUALA LUMPUR (Sept 20): Affin Investment Bank Research has maintained its ‘buy’ call on ALAM MARITIM RESOURCES BHD [] with unchanged target price (TP) of RM1.80. This is in light of a RM45 million contract secured by Alam via its subsidiary.

Yesterday, the oil and gas support services provider announced that its wholly owned unit, Alam Maritim (M) Sdn Bhd, had recently secured a contract from an established oil and gas company for the provision of one unit of Anchor Handling Tug vessel.

At 11.06 am today, Alam was traded at RM1.54, after rising 3 sen or 1.9%, with some 3.1 million shares exchanging hands.

In a note, the research house said today it is positive on the contract win as the long contract tenure will ensure high vessel utilisation and improve earnings visibility for the next three years.

“Also, the daily charter rate of US$9,700 (RM30,691) per vessel is broadly in line with our forecast,” said Isaac Chow, an analyst at Affin IB Research.

“Thus, we retain our ‘buy’ rating with an unchanged TP of RM1.80 based on 14 times CY14 earnings per share (EPS).”

Chow also said he made no changes to the FY13-15 earnings estimates as he had already imputed a high utilisation rate of over 90% for Alam’s workboat and work barges.

This also includes a high utilisation rate of over 75% for its AHTS vessels, he said.

“We like Alam for its undemanding valuation at 12 times CY14 EPS, strong earnings growth across all it business divisions and potential value accretive corporate exercises.”